What is Making Tax Digital for Landlords?

What is Making Tax Digital (MTD)?

Making Tax Digital is HMRC's long-running programme to modernise the UK tax system. The goal is straightforward: replace paper records and annual Self Assessment tax returns with digital record-keeping and more frequent reporting.

The part that affects landlords is called MTD for Income Tax Self Assessment (MTD ITSA). Under MTD ITSA, landlords and self-employed individuals must keep digital records of their income and expenses and submit quarterly updates to HMRC using compatible software. This replaces the traditional model of filing a single Self Assessment tax return at the end of each tax year.

MTD has already been rolled out for VAT-registered businesses, who have been filing digital VAT returns since 2019. MTD ITSA is the next phase and represents a much larger change, bringing millions of landlords and sole traders into the digital reporting system for the first time.

Who needs to comply?

MTD ITSA is being introduced in stages based on your gross income from self-employment and property combined. The thresholds are:

• From 6 April 2026: individuals with gross income over £50,000
• From 6 April 2027: individuals with gross income over £30,000
• From 6 April 2028: individuals with gross income over £20,000

The income threshold is based on your gross income — that is, your total rental income and any self-employment income before deducting expenses. If you earn £35,000 from rent and £20,000 from a side business, your combined gross income is £55,000, meaning you would need to comply from April 2026.

Partnerships and limited companies are currently excluded from MTD ITSA. If you hold property through a limited company, MTD ITSA does not apply to you at this stage — though HMRC may extend the programme in future.

What you need to submit

Under MTD ITSA, the annual cycle of filing a single tax return is replaced by a more structured submission flow throughout the year:

• 4 quarterly updates — each quarter, you submit a summary of your income and expenses for that period. These do not need to be exact to the penny, but they should give HMRC a reasonable picture of your financial activity.
• Annual submission — after the end of the tax year (5 April), you submit any capital allowances, adjustments, and accounting corrections that apply to your records.
• Final declaration — this is the equivalent of your current Self Assessment tax return. It confirms your total income and tax liability for the year and is due by 31 January following the end of the tax year.

All submissions must be made through MTD-compatible software that connects to HMRC's systems. You cannot submit quarterly updates through HMRC's online portal or by post.

Quarterly deadlines

The tax year is divided into four standard quarters. Each quarterly update is due approximately one month after the quarter ends:

After Q4, you then have until 31 January of the following year to submit your annual submission and final declaration. For example, for the 2026/27 tax year, the final declaration deadline would be 31 January 2028.

What changes for landlords

If you currently manage your rental accounts in a spreadsheet or shoebox of receipts and file a Self Assessment return once a year, MTD ITSA brings three significant changes:

• Digital record-keeping is mandatory. You must keep your income and expense records in digital form using MTD-compatible software. A paper ledger or basic spreadsheet that cannot connect to HMRC is no longer sufficient on its own.
• You need compatible software. HMRC requires you to use software that can communicate with their systems via API. This is how your quarterly updates and final declaration are submitted. Not all accounting software supports MTD ITSA — you need to check that your chosen product is on HMRC's approved list.
• Reporting moves from annual to quarterly. Instead of one tax return per year, you will interact with HMRC four times a year plus an annual submission and final declaration. This means staying on top of your records throughout the year rather than scrambling in January.

For landlords who already use accounting software and keep tidy records, the transition should be relatively smooth. For those who have been managing things manually, it will require adopting new tools and habits.

Penalties for late submissions

HMRC is introducing a new points-based penalty system for MTD ITSA, replacing the old fixed-penalty regime. Here is how it works:

• Each time you submit a quarterly update late, you receive one penalty point.
• Once you accumulate four penalty points, you receive a £200 fine.
• Every subsequent late submission after reaching four points incurs a further £200 penalty.
• Points expire after 24 months of compliance, giving you a path back to a clean record.

Late payment of tax continues to attract interest charges as it does today, and late filing of the final declaration (the equivalent of the Self Assessment return) carries its own separate penalties.

Importantly, HMRC has confirmed a soft landing period for the 2026/27 tax year. During this first year, penalty points will not be issued for late quarterly updates. This gives landlords time to adjust to the new system. However, penalties for late final declarations and late payment of tax still apply during this period — the soft landing only covers the quarterly updates.

Exemptions and special cases

Not everyone is required to follow MTD ITSA. The following groups are currently exempt:

• Individuals whose combined gross income from self-employment and property falls below the applicable threshold for the year.
• Landlords who hold property exclusively through a limited company (the company files Corporation Tax, not Self Assessment).
• Non-UK residents who do not file UK Self Assessment returns.
• Individuals who are digitally excluded — for example, due to age, disability, or lack of internet access. You can apply to HMRC for an exemption if this applies to you.

If you are unsure whether you need to comply, check your combined gross income for the previous tax year or speak with an accountant.

Getting ready for MTD

If you are a landlord affected by MTD ITSA, here is a practical checklist:

• Check your income. Add up your gross rental income and any self-employment income. If the total exceeds the threshold for your start date, you need to prepare.
• Choose compatible software. You need software that is recognised by HMRC for MTD ITSA. Make sure it supports property income, not just self-employment.
• Digitise your records. Start keeping your income and expenses digitally now, even before your mandatory start date. This makes the transition smoother.
• Sign up with HMRC. You will need to sign up for MTD ITSA through your Government Gateway account before your first quarterly submission is due.
• Talk to your accountant. If you use an accountant, discuss who will handle the quarterly updates and how your workflow will change.

Simplify MTD with Landlo

Landlo is built specifically for UK landlords navigating MTD. It handles digital record-keeping and submits your quarterly updates and final declaration to HMRC automatically — so you can focus on managing your properties instead of tax admin.

Learn more about Landlo →